Category: White Papers

Automation driving productivity gains but retraining programs needed

A really insightful article was published by Ylan Q. Mui of the Washington Post today. It spoke about the current state of American manufacturing, which has obviously been a topic of immense focus in this election cycle.

What the article tells us is that American manufacturing is actually doing very well, at least from an aggregate production standpoint. In fact, total output is nearing the all-time high levels that occurred immediately prior to the Great Recession.

The Fed notes that total American manufacturing production has climbed significantly in the last few decades.

It is true that the total number of Americans employed in manufacturing has gone down significantly in recent years. But that inherently implies that the people doing the manufacturing are reaching new levels of productivity on a per person basis.

We can speak to this first hand. Every day at 3Diligent, we interact with companies pursuing more effective production of their next generation prototypes, production parts, replacement spares, and custom tools to support some of their traditional manufacturing processes. All of these companies recognize that advancements in technology are providing them new and better ways of doing things. Injection Molding, CNC Machining, and most recently Additive Manufacturing (a.k.a. 3D Printing) are all examples in that progression. Our rock star contract manufacturing partners utilize those tools to accelerate innovation and make our customers more competitive in the global marketplace.

Automation is a good thing. It allows us to innovate faster and produce more products locally that otherwise would need to be sent overseas to be price competitive. While the pace of change can sometimes make us uncomfortable, we have to recognize that short of an international truce on technological advancement, continued automation is going to happen. Because America doesn’t have a monopoly on processors, memory chips, and the internet, trying to pump the brakes on technological advancement only stands to leave us behind those countries who are pushing forward aggressively. Better to be the ones doing the innovating and creating the next generation technologies than the ones having to buy them from overseas once foreign countries have developed them.

With that said, whether it be to automation or overseas labor, there are a significant number of manufacturing professionals who have been lost in the shuffle. So for all the macro benefits that faster times to market and lower unit costs provide the American economy, at the micro level, there are some very real consequences for those individuals displaced by technological advancement and their families.

The number of American workers in the manufacturing sector has declined significantly in recent years

It is of critical importance then that America develops retraining programs for manufacturing workers displaced by automation and globalization. Such retraining programs can equip those displaced workers with the skills to tackle jobs for the new manufacturing economy or transition them into other industries.

That is one of the reasons that we at 3Diligent are big supporters and proud members of America Makes, the National Additive Manufacturing Innovation Institute. In addition to funding a wide number of research programs helping foster American innovation in the area of 3D Printing, they are also starting to really tackle the challenge of helping train the next generation of American manufacturers in how to get the most out of additive manufacturing technology and take this innovation from the R&D lab to the shop floor.

American manufacturing is doing admirably but it isn’t without some serious growing pains. We are excited to support innovative companies that are embracing this evolution and organizations like America Makes doing the right things to help retrain American manufacturing workers to succeed in these times of rapid change.

There are a few new nuggets in there – including links to a number of great resources to inform your search. As we spell out, it’s important to take application, hard costs, soft costs, obsolescence risks, and viable alternatives into account. We hope you find it insightful. And as always, if you have questions, feel free to reach out to us. You can also comment below or in Engineering.com comments section…

AT Kearney, a leading global consultancy with expertise in the 3D Printing industry, recently released 3D Printing: A Manufacturing Revolution. Lots of great content in there, outlining their belief of how the market will evolve and grow at an average growth rate of 25% over the next five years en route to being a $17B global industry by 2020. This is a bit less than the Wohler’s Report’s estimate of $20B by 2020, but they are clearly believers in a continuation of the aggressive market growth we are seeing at 3Diligent.

The 16-page report has a number of interesting takeaways, but here are the big ones:

1. The question is not if but when companies need to consider 3D Printing. This is the very first line of the report. AT Kearney fundamentally believes in the disruptive nature of the technology, and that most every company will need to incorporate 3D Printing into their operations at some point – whether it’s simply for prototyping or as a more central part of the supply chain for mass production. Smart companies will get ahead of the curve and start down this road to 3DP integration sooner.

3. Value chains will be disrupted by 3D Printing. AT Kearney foresees a world where mobile and 3DP integration will allow for customers to see an item they like, customize it via their phone, and have it printed on demand to be picked up within hours. Naturally, this uproots the existing system, where decisions on inventory stocking are typically made months in advance, leaving customers to take or leave what’s there, with the power of the internet to hopefully aid them in finding a viable option.

4. The fastest growth will come from the jewelry and energy sectors. 3D Printing has been most readily adopted so far by aerospace, industrial, healthcare, and automotive companies, and significant growth of 15-25% per year is expected for each of those sectors. However, the most rapid growth is anticipated for the jewelry (25-30% per year) and energy (30-35% per year) industries.

5. Hardware improvements are needed to achieve production levels for many industries. While 3DP serves as a viable solution for prototyping and limited production run products, the end goal is to achieve rapid manufacture of production parts at significant scale. Gating criteria to achieving mass production are printer speed, available materials, assembly and testing, and achievable tolerances. While they expect these criteria will be achieved in the next 5-7 years for such products as cameras, biomedical device kits, and iPhone cases, scale production of such items as cars, apple watches, cosmetics, and helmets are likely to farther away.

6. New software platforms will be vital to support 3DP applications. To support this new ecosystem, software will need to be developed that supports the evolving supply chain.

We here at 3Diligent generally think AT Kearney has done a very nice job of setting the stage, and we encourage you to give the report a read yourself. For a bit of additional detail on applications and possibilities of 3D Printing, have a look at our Possbilities of 3D Printing report. Additionally, if you’re curious to know more about the prototype/production crossover point, you might be interested in having a look at the 3DP Crossover Point Post within our Economics of 3D Printing series.

A lot has been made in the press of 3D Printing stocks – most notably Stratasys and 3D Systems – over the last several years. First, they were darlings of Wall Street, reaching astronomical valuations buoyed by the seemingly unlimited potential of the technology, corresponding expectations for hyper growth, and their leading market positions. But something happened in the last year or so – the companies that had been grabbing headlines for their burgeoning market caps were getting those headlines for disappointing investors, missing earnings, and plummeting stock prices.

To an outsider, this might signal an ominous sign for the 3D Printing industry. Perhaps the technology has hit a wall – the hype was simply too big and the substance isn’t there to match it. Some have argued that the technology is passing through the fabled “trough of disillusionment,” when a public that had become enamored with a new technology’s potential comes to terms with the hard truth that its actual capabilities are a far cry from the headlines.

While there is cause to temper the most aggressive expectations somewhat – people will not eventually print everything at home, for instance (more on that in another post) – I would argue that these stocks tanking is a good sign, rather than a bad one, for the industry and technology as a whole. 3D Printing continues to retain the same promise it’s always had, and the advancements in the technology are rapid and encouraging. However, 3D Printing stocks have been getting hammered because those companies that are publicly traded are going through a genuine trough of disillusionment regarding their ability to corner this emerging market. They have suffered from some questionable acquisitions, pursuit of a consumer market that isn’t quite there yet, and a number of other factors that have given investors just cause to deflate valuations of those specific stocks.

But the industry marches on, and marches faster. A few key facts to consider…

Market growth was enormous last year, outpacing consensus expectations. According to Wohlers and Associates’ annual report, the global 3D Printing market revenues – defined as the combination of printers, feedstocks, and services – grew from $3.1B in to $4.2B in 2014. That’s a 35% growth rate, outpacing virtually every industry analyst’s expectation. Major printing stocks couldn’t keep pace with that industry growth – last quarter, DDD was up 8.8% over the same period last year, and SSYS was similarly up 14.4%. Not bad, but not 35%.

New innovations are introduced to the market on a seemingly weekly basis. Take the eight day span from March 17-25 for instance, when not one, but two companies – Carbon 3D and Australia’s Gizmo3D – publicized videos with prototype printers executing stereolithography-esque printing at speeds of 25x-100x what the market currently offers. Just a few months prior, HP officially announced its intention to become a major player in the market, with plans to introduce its MultiJet Fusion technology to the market before the end of 2016. And a few months later, Cosine Additive showed at RAPID with a large form FDM printer to compete with Stratasys’ Fortus 900mc.

Metal printing is exploding. EOS, Arcam AB, Concept Laser, SLM Solutions – all are signaling significant growth to the market. Take Arcam AB (the only publicly traded metal printer manufacturer of the bunch), for instance, which reported healthy growth and earnings in 2015 with a 105% increase in sales and 208% increase in earnings per share. Its stock price has also slid in the last year, but one might argue that’s a case of presumed guilt by association with other 3D Printing stocks.

Businesses that have invested in industrial grade equipment are busy and investing in new equipment. Since our company, 3Diligent, is in the business of connecting supply with demand for on-demand rapidly manufactured parts, I can attest to this from firsthand meetings with 3D Printing service providers and corporations. Quality service providers are busy and continuing to expand their industrial machine base. Seemingly every company has “Develop a strategy for 3D Printing” in its leadership directives. The demand is growing and the supply is growing to match it – in some cases, it’s backlogged. Incorporating additive manufacturing into product design and inventory management activities is simply too disruptive and potentially beneficial to ignore. And that isn’t to even consider the larger mass manufacturing implications for 3D Printing when a broader swath of designers understand how to optimize next generation designs for the technology.

So it’s important not to conflate disappointing performance by a few publicly traded companies with broader industry performance and prospects. Stratasys and 3D Systems continue to manufacture some of the industry’s most reliable and fully featured printers – particularly when it comes to plastics and resins. It’s just that Wall Street is coming to realize, among other things, that innovation with a technology this revolutionary is going to come from many places, and no two companies are going to be able to corner all of the market’s growth.

All things considered, this is great news for anyone hoping 3D Printing will guide us through another Industrial Revolution. Competition breeds faster innovation, better products, and more competitive pricing. So don’t lose heart that a few stocks have taken it on the chin the last few quarters – the future of 3D printing is very bright indeed…

Cullen Hilkene is CEO of 3Diligent, the Sourcing Solution for Industrial Grade Rapid Manufacturing. He is an alumnus of Princeton University, the UCLA Anderson School of Management, and Deloitte Strategy and Operations Consulting. For more information about 3D Printing and to access 3Diligent’s marketplace of 3D Printing vendors, visit www.3Diligent.com.

There is no shortage of buzz these days about 3D Printing. A Netflix documentary about 3D Printing was a much-hyped fall release, home 3D printers were promoted as one of the big gifts of the holiday season, and rarely a day goes by without someone in the business community talking about the myth or reality of 3D printing’s future. Amidst all the chatter, and despite an increasingly high degree of awareness across the country and world, a true understanding of the 3D printing market – where it is, where it’s going, and what’s going to get it there – remains an elusive bird. This document sets out to provide a baseline understanding of 3D Printing: its history, the different 3D Printing technologies and how they work, practical applications of the technology, and the current state of the 3D printing market.

History of 3D Printing

Origins

3D Printing is, surprisingly to some, a fairly old and established technology. The first 3D Printer, a Stereo Lithography Apparatus (SLA), was invented by Charles Hull in 1984. He went on to found 3D Systems, the first 3D Printer manufacturer. Fast forward 30 years, and the industry is just now reaching an inflection point for explosive growth. In the last decade, various industrial grade printer manufacturers have emerged with new technologies, creating competition in the printing of high grade plastics and metals. Further, with the expiration of original Stratasys and 3D Systems patents, hundreds of new consumer printers have now entered the market, capturing the imagination of the masses.

In conjunction with this increase in competition has been an increase in quality. While 3D Printing designs were previously the stuff of artistic models or non-functional prototypes, the arrival of new materials – particularly heavy duty polymers and metals – as well as enhanced printer accuracy and speed have allowed for functioning prototypes and end-use parts to be created in a 3D printer. The ability to produce functional parts is huge for 3D Printing as it opens market opportunities with much heavier industry. To be clear, 3D Printing still has limitations to address (e.g., limited availability of materials, as-printed finish quality), and while those are being worked out CNC machining[1] will sometimes be the more effective rapid manufacturing solution. We suspect that traditional subtractive manufacturing will remain the better choice for most mass produced jobs – particularly simple parts – because it is faster and cheaper with large quantities. Nevertheless, the potential is enormous and there are many companies who have realized where the technology is going and have embraced it whole heartedly.

Looking Forward

The combination of these factors – combined with a sense the cost of printing must come down – has led to the prevailing sentiment that 3D Printing is at an inflection point for rapid to explosive growth. Wohler’s and Associates, the pre-eminent consulting firm for the 3D Printing Industry, projects market growth from $3B in 2013 to $21B by 2020 – a CAGR of 31%. Investment banks like Morgan Stanley[2] and Credit Suisse[3] generally support that growth estimate. These projections speak to a bright immediate future, but many investors in the space are thinking long term when placing their bets. The global manufacturing industry is $10.5T in size, and many believe 3D Printing is destined to displace at least 10% of that market share. Beyond displacement of traditional manufacturing, 3D Printing also stands to create new opportunities not currently addressed by traditional manufacturing operations. Custom printing of medicine, human tissue, housing, and food are all currently in varying stages of research and development.

The Technology

The market is at an inflection point, the near term growth projections are aggressive, and the potential market opportunity is enormous. But how does 3D Printing technology actually work? Here’s a quick summary of Computer Aided Design (CAD), the computer programming that provides the foundation for 3D Printing, as well as an overview of some of the most prominent 3D printing technologies today.

Computer Aided Design (CAD)

Providing the foundation for not only 3D Printing but also its rapid manufacturing brother CNC Machining is Computer Aided Design (CAD) technology. CAD is, for most intents and purposes, digital 3D blueprinting. Using this computer software, engineers are able to create designs which can then be fed into 3D Printers or CNC Machining devices. Using the designs, the machines then process the data based on the accuracy parameters provided by the machine’s technician to develop an approach to manufacturing the design. This creates incredible efficiencies…please have a look at the video behind this link, where Spacex and Tesla CEO Elon Musk speaks to the power of CAD design and 3D Printing in product development: https://www.youtube.com/watch?feature=player_embedded&v=xNqs_S-zEBY.

Primary 3D Printing Types

All 3D Printers are similar in one key respect – they all process CAD files to build a part additively, layer-by-layer, until the desired shape is created. Beyond that, differences abound. The exact process by which those layers are built, the materials available, and the physical equipment used to build those layers all vary significantly. With those differences in turn come significant variances in speed, cost, and quality. Figure 1 presents some of the most common 3D printing technologies, a brief description of each, and video links where you can see the respective technologies in action.

Figure 1. Different Types of 3D Printing

Process

Leading Providers

Process Overview

Video Link

Sterolithography (SLA)

3D Systems, Autodesk, FormLabs

Builds parts by selectively curing a liquid photopolymer "resin" in a vat with an ultraviolet laser and a moving platform

3D Printing Applications

As noted previously, the key benefits of 3D printing are twofold: the ability to rapidly manufacture small quantities and the elimination of design constraints inherent to traditional subtractive manufacturing. This leads to a number of key applications throughout the product lifecycle.

Rapid Prototyping

Because 3D printing allows for such rapid iteration within CAD programming, without the need for significant setup time between production runs, that it is an ideal tool for rapid prototyping. In fact, the term “Rapid Manufacturing” has been used synonymously with “3D Printing” and “Additive Manufacturing” over the past several years because of its unique suitability to this role.

Manufacture of Extremely Complex or Organically Shaped Parts

The elimination of design constraints and the arrival of production grade plastic and metal feedstock for 3D printers has allowed companies to consider creation of parts that would otherwise be impractical or outright impossible to manufacture with traditional subtractive manufacturing processes (e.g., lathing, milling). Most commonly, the parts chosen for mass 3D printing manufacture are either innovative new designs (e.g., patient-customized prosthetics) or to combine multiple subassemblies into singular parts to eliminate complexity and failure risk (e.g., NASA’s reduction of sub-assemblies in its rocket fuel injector from 163 to 2).[4]

Manufacture of Lighter Parts

3D Printing’s ability to lay down very specific patterns allows for what is commonly known as “honeycombing” of walls in manufactured parts. Like a truss bridge that is as strong yet lighter (due to its triangle-based support system throughout its sides[5] or the bee honeycomb from which it gets its name than a solid object) 3D printers can build parts with largely hollow walls that maintain a comparable material strength to parts that previously had to have solid walls via subtractive manufacturing processes. This has made the process especially attractive to industries where being light is key, such as aerospace and automotive.

Manufacture of Legacy Spare Parts

In industries such as aerospace, automotive, and industrial products, the productive life of a part is often measured in decades rather than months or years. Yet many Original Equipment Manufacturers (OEMs) do not offer a warranty or reasonably priced replacement spares for older parts. Customers are often left hunting far and wide for aftermarket solutions while their machine sits idle. For those OEMs that offer long-term or lifetime warranties, the cost of manufacturing legacy parts is impractically high – either produce a small batch at a quantity well below scale or suffer the cost of carrying excess inventory for these seldom ordered parts. In both scenarios, high costs are understandably passed along to customers as high prices.

Production grade 3D printing will increasingly eliminate this dilemma. So long as there is a CAD file for the part, the spare can be manufactured on demand, to specification, and provided to the customer at a far lower unit price than possible before. This 3D printing application will become prominent in coming years, as regulators (e.g., FAA) become increasingly comfortable with 3D printed end use parts.

State of the Market

With the arrival of production grade 3D printing and all of its game changing applications, the question is naturally raised “Why haven’t I heard about all this yet?” That question begs a quick state of the market assessment as we close the chapter on this white paper, and prepare to open a new chapter in discussing how 3Diligent will play a role in helping accelerate the adoption of this technology.

The Market

According to a Wohler’s and Associates estimate, the global 3D Printing Market was $3.1B at the end of 2013. Of this, roughly two-thirds of industry revenues came from the United States. Industry revenues are split between 3D Printer sales, 3D Printer feedstock sales, printer-related service, and on-demand part manufacture, with on-demand part manufacture representing about 30%.[6] Most of these revenues are and will continue to be booked within the business sector – Goldman Sachs projects that only 2.5% of the market will be consumer spending. [7] Industries such as aerospace (e.g., Boeing, Airbus, NASA), life sciences (e.g., dental), automotive (e.g., Formula One Racing), and consumer/industrial products will drive long term growth.

The market’s growth to date has been hindered by two key issues – limited applications and cost. However, as noted earlier, the first of those items has increasingly been addressed by new production-grade materials and more reliable print quality, and the second is partially being addressed by the arrival of new competitors. Prevailing sentiment is that the applications outlined earlier will increasingly be adopted and that costs will continue to come down, resulting in a market explosion to $21B by 2020.

The questions that remain are “How will companies become more aware of these applications?” and “What will push the cost down to a level of broad market adoption?” That is where 3Diligent comes in. In our next white paper, we will outline the important role a B2B marketplace can play in promoting broader market awareness of 3D Printing’s technological capabilities, but more importantly how our unique approach to fostering competition and utilizing the industry’s excess capacity can drive down costs and promote quality to accelerate mass market adoption.

Sources:

[1] CNC Machining also uses CAD data, but rather than use that data to build up a part additively, it uses that data to calculate very exact pathways for machine tools (lathes, mills, etc.) housed within a single apparatus that then gradually remove scrap material until the desired end use part is achieved. Of note, CNC Machining is a service also offered through the 3Diligent platform, as we anticipate a transitory period of many years where certain jobs are better suited for CNC Machining than 3D Printing. This video link offers some useful visuals: https://www.youtube.com/watch?v=RnIvhlKT7SY